Prevailing Wage and Apprenticeship Requirements
On November 30, 2022, IRS published guidance (Notice 2022-61) on the Inflation Reduction Act's prevailing wage and apprenticeship requirements. To qualify for most credits, or receive a bonus credit, taxpayers must meet the prevailing wage and apprenticeship requirements.
"The requirements … with respect to any qualified facility are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in … the construction of such facility, and ... the alteration or repair of such facility, shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such facility is located as most recently determined by the Secretary of Labor. . . *Internal Revenue Code 45(b)(7)(A)
In order to satisfy the IRA’s prevailing wage requirement the Taxpayer must:
Paying all laborers and mechanics performing construction, alteration, or repair at a qualified facility at least the prevailing wage.
Maintaining accurate records to provide that laborers and mechanics were paid wages not less than the prevailing wage rates for the appropriate scope of work completed.
PREVAILING WAGE TOOL SEARCH
Apprenticeship requirements;
Apprenticeship Labor Hour Requirement:
For facilities or credits to qualify, apprentice requirements must meet certain thresholds
Applicable percentage - For facilities that begin construction before 2023, the “applicable percentage” of apprentice employees to total employees is 10%, rising to 12.5% for facilities that begin construction in 2023, and 15% for facilities that begin construction after 2023
To ensure the threshold is met, take total apprentice workers and divide by total employees to determine what applicable percentage applies
Apprenticeship Ratio Requirement:
Hiring of apprentices must align with apprentice-to-journeyworker ratios of the Department of Labor or the applicable State apprenticeship agency.
Apprenticeship Participation Requirement:
For every four or more individuals hired for the construction, alteration, or repair of a qualified facility the Taxpayer or Contractor must hire at least one or more qualified apprentice.
Good Faith Effort Exception
The apprenticeship requirement can be waived if the Taxpayer can show they made a good faith effort to hire the appropriate number of apprentices and were unsuccessful in doing so due to a lack of qualified apprentices available.
Visit Sam.gov for determination on Prevailing Wage requirements
Prevailing Wage and Apprenticeship Requirements apply to;